INCOME TAX |
Income Calculation |
Deductions |
Turner v. Canada
A-538-98
Robertson J.A.
27/6/00
4 pp.
Appeal from Tax Court's ruling taxpayer unable to deduct loss--Income Tax Act, s. 50(1)(b)(iii) providing taxpayer deemed to have disposed of share for proceeds equal to nil where, at end of year corporation insolvent, not carrying on business, fair market value of share nil, reasonable to expect corporation will be dissolved and will not commence to carry on business, and taxpayer electing in tax return to have subsection apply--Turn-Air's licence to operate revoked in 1984--Lawsuit relating to alleged wrongful revocation of licence not settled until 1994--Company wound up in 1994--Taxpayer electing in 1994 return to claim loss--(1) S. 50(1)(b)(iii) not coming into play merely because company ceasing to do business--Must show reasonable to expect Turn-Air would be dissolved, not commence to carry on business in future--Not reasonable to conclude as of 1984 company would be dissolved, never carry on business in future--Taxpayer entitled to elect to claim loss in 1994--(2) Tax Court erred in concluding no evidence presented to establish what consideration paid by taxpayer in return for shares in Turn Air--Uncontradicted evidence taxpayer invested $55,000 of own money to purchase licence under which Turn-Air to operate--Also affidavit of accountant indicating taxpayer issued shares at total cost of $55,090--Sufficient evidence upon which taxpayer deemed to have rebutted Minister's presumption --Income Tax Act, R.S.C., 1985 (5th Supp., c. 1), s. 50(1)(b)(iii) (as am. by S.C. 1995, c. 21, s. 15).